Prices for Japanese hot rolled coil (HRC) in the export market have been moving downwards continuously over the past month due to weak demand in the local and overseas markets. However, despite the still bearish outlook in the global market and sharp drops in Chinese HRC quotes, exporters are aiming to increase prices for September shipment HRC, although new price levels will hardly be supported by buyers, especially in Asia.
Offer prices for ex-Japan SAE1006 HRC to Asian customers have been decreased to $650-700/mt CFR in mid-July, with the lower range corresponding to the spot offers to Pakistan, while the higher end reflects the official level from one of the major mills to Bangladesh. This means that prices have lost $135/mt on average over the past month. Meanwhile, offers to Vietnam have settled at around $670/mt CFR, which is considered overpriced, considering that offers for Chinese and Indian coils are currently standing at $610-620/mt CFR. "Japanese mills do not want to offer below $600/mt FOB, while Chinese mills are aggressive, since their domestic demand is low and futures keep falling," an international trader told SteelOrbis. "They [Japanese mills] want to increase the prices, which no one will accept for now, as no one is bidding at the moment," another source added.
In the meantime, ex-Japan HRC offers to southern Europe have been heard at around €750/mt CFR, compared to €840/mt CFR one month ago, although the current offers are €10-20 /mt higher compared to last week. "The European market seems to have reached the bottom and local manufacturers are even making attempts to increase prices, so Japanese suppliers see some opportunities there," a market insider stated. Notably, in the January-May period this year, Japanese HRC exports to Spain showed threefold growth year on year, reaching 135,118 mt, while HRC shipments to Italy increased by eightfold to 262,499 mt year on year, according to Japan’s official trade statistics.